The US Treasury Department is preparing to invest an additional US$7.5 billion in GMAC LLC, the Detroit-based auto finance company, in a deal that could allow the US government to hold a majority stake in the company, reports reaching here said on Wednesday.

GMAC, whose financial good health is key to providing loans forconsumers to buy General Motors Corp. and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital. It had hoped to close the deal last week, a Detroit News report said.

In December, the US Treasury invested US$5 billion in GMAC by buying preferred stock in the finance company. That stock carries a 9 percent dividend, but has no voting rights. The US Treasury Department also loaned GM nearly US$900 million to buy GMAC stock.

If the Treasury exercised its options from those investments, which would give it voting rights, it could own about 35 percent of GMAC, a person familiar with the matter was quoted as saying.

According to the person, the additional US$7.5 billion could allow the Treasury Department to claim a majority stake in GMAC, if it chose to do so.

The Treasury Department and Federal Reserve Board this month announced GMAC needs US$11.5 billion in additional capital reserves as the result of government stress tests. The additional assistance to be announced this week is likely not the end of government support for GMAC.

(Xinhua News Agency May 21, 2009)